Transmission Upgrades & Expansion
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TRANSMISSION UPGRADES & EXPANSION: KEYS TO MEETING LARGE CUSTOMER DEMAND FOR RENEWABLE ENERGY Prepared by David Gardiner and Associates for the Wind Energy Foundation January 2018 TRANSMISSION UPGRADES & EXPANSION: KEYS TO MEETING LARGE CUSTOMER DEMAND FOR RENEWABLE ENERGY January 2018 A project of the Wind Energy Foundation Wind Energy Foundation David Gardiner and Associates 1501 M Street NW, Suite 900 2101 Wilson Blvd. Suite 550 Washington, DC 2005 Arlington, VA 22201 202-552-8105 703-717-5590 2 | TRANSMISSION REPORT TABLE OF CONTENTS I. INTRODUCTION 5 II. EXECUTIVE SUMMARY 6 III. CORPORATE DEMAND FOR RENEWABLE ENERGY IS GROWING 9 IV. THE CENTRAL U.S. LEADS THE NATION IN RENEWABLE ENERGY PRODUCTION AND POTENTIAL 12 V. POWER PURCHASE AGREEMENTS, WHICH DEPEND ON TRANSMISSION, ARE ENABLING CORPORATE PURCHASERS TO PROCURE RENEWABLE ENERGY 15 VI. PLANNING AND DEVELOPING TRANSMISSION REQUIRES FEDERAL, 17 STATE, AND LOCAL COORDINATION 18 State Authorities 18 Federal Authorities Planning Coordinators 18 Utilities 19 Merchant Transmission Developers 19 VII. DC AND AC TRANSMISSION LINES: TECHNOLOGIES AND PRIMARY BUSINESS MODELS 20 Corporate Purchasers & Other Stakeholders Are Calling for Transmission Expansion 21 VIII. TRANSMISSION UPGRADES AND EXPANSION ARE NEEDED TO MEET 22 GROWING CORPORATE DEMAND Analysis of How Transmission Can Meet Corporate Renewable Procurement Goals and RPS Demand 22 Corporate Demand and Transmission Scenarios 23 IX. TRANSMISSION PLANNERS SHOULD CONSIDER CORPORATE RENEWABLE DEMAND 24 X. EXPANDING TRANSMISSION PROVIDES ADDITIONAL BENEFITS 25 Cost Savings 25 Grid Reliability 27 Air Quality Improvements and Carbon Emission Reductions 27 XI. CASE STUDIES 28 PJM: Clean Line's Grain Belt Express will unlock renewable resources to meet corporate demand 28 MISO: Multi-Value Project (MVP) Portfolio will help corporate energy buyers in the Midwest access renewables 30 ERCOT: CREZ lines enable Amazon & other corporate purchasers to procure renewable energy SPP: 32 Hitchland-Woodward Transmission Line enables Google to procure low-cost renewable energy 34 XII. CONCLUSION 36 XIII. RESEARCH METHODOLOGY 37 XIV. APPENDIX A: INTERVIEWS 37 XV. ACKNOWLEDGEMENTS 38 TRANSMISSION REPORT | 3 4 | TRANSMISSION REPORT Figure 1. Map of Regional Transmission Organizations (RTO)/ Independent System Operators (ISO) I. INTRODUCTION This report examines the opportunity to meet large customer demand for renewable energy through transmission upgrades and expansion. The need for this report is driven by two key emerging trends: (1) demand from large corporations is growing rapidly, as many are choosing renewable power to meet their existing needs as well as supply new demand; and (2) renewable energy is more affordable Source: U.S. Federal Energy Regulatory Commission (FERC), than ever, but customers’ access to this https://www.ferc.gov/industries/electric/indus-act/rto.asp affordable energy is constrained by inadequate transmission planning. Figure 2. Land-Based and Offshore Annual Average The report examines opportunities across Wind Speed at 80 m four key Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs): the Electric Reliability Council of Texas (ERCOT), the Midcontinent Independent System Operator (MISO), the PJM Interconnection (PJM), and the Southwest Power Pool (SPP). These four RTOs are of particular interest because they span geographic regions with high on-shore wind resources (especially ERCOT and SPP), as illustrated in Figure 2.1 The Wind Energy Foundation commissioned this report on behalf of its A Renewable America campaign. Source: National Renewable Energy Laboratory, http://bit.ly/2zSUGFv TRANSMISSION REPORT | 5 II. EXECUTIVE SUMMARY This report examines the need to expand and upgrade U.S. transmission lines to meet the significant renewable energy demand of large non-utility customers, especially from Fortune 500 companies. Investment in transmission infrastructure is essential to support not only significant additions of renewable generation to meet corporate and other demand, but also for the longer-term electrification of transport, heating, and cooling. We found that: (1) renewable energy commitments from large corporations are growing rapidly and will lead to significant renewable energy procurement through 2025; (2) most of the best renewable energy resources are in a 15-state central U.S. region, while load growth is highest outside the region; (3) expanded and upgraded transmission is needed to unlock new low-cost renewable energy for corporate and other consumers; and (4) transmission planners should account for corporate demand. KEY FINDINGS: Corporate commitments to procure Transmission expansion and upgrades are needed to renewable energy are growing rapidly and spur enough renewable energy development to meet are projected to continue to do so. this growing demand, and can provide other benefits. • Renewable energy procurement from large • The strongest and often lowest-cost renewable energy institutional buyers, including many Fortune resources are located in the central U.S. region, 15 500 companies, has increased considerably states between the Rockies and the Mississippi River: in recent years and is one of the most Arkansas, Colorado, Iowa, Kansas, Louisiana, Minnesota, dramatic recent changes in electricity Missouri, Montana, Nebraska, New Mexico, North markets.2 Since 2013, U.S. corporations have Dakota, Oklahoma, South Dakota, Texas, and Wyoming. signed nearly 9 gigawatts (GW) of long-term wind and solar power contracts (equal to • This region accounts for 88 percent of the country’s wind over 16 conventional power plants and technical potential and 56 percent of the country’s enough electricity to power over 7.5 million utility-scale solar photovoltaic technical potential, yet is homes).3 home to only 30 percent of projected 2050 electricity demand (see Section IV). This finding suggests that • The Renewable Energy Buyers Alliance future transmission is needed to export this electricity (REBA), representing more than 100 U.S. from this high-production region to the growing demand corporate buyers, set a goal to deploy 60 GW outside of this region. of new renewable energy capacity in the U.S. by 2025 —equal to 110 conventional power • Transmission upgrades and expansion provide large plants and enough electricity to power nearly non-utility customers access to low-cost renewable 50 million homes.4 Considering the 9 GW of energy through power purchase agreements (PPAs). renewable energy already procured by • Increasing the supply of renewable energy through corporate purchasers since 2013, there is at transmission can deliver cost savings, grid reliability least 51 GW remaining in this goal. benefits, and greenhouse gas (GHG) emissions • These companies have a variety of reasons reductions to all customers. for increasing their demand for renewable • Upgrading and expanding the existing transmission energy, such as lower costs, price risk network would also relieve congestion problems and reductions, and corporate environmental could lower costs for non-PPA consumers.5 initiatives. 6 | TRANSMISSION REPORT Transmission planning fails to account for the rapid KEY RECOMMENDATIONS: increase in corporate and other institutional demand and does not focus adequately on the need to transmit Corporate buyers and other large institutional renewable electricity from the central U.S. region customers should: to the rest of the country or on remote high-quality renewable resource areas within each region. • Encourage transmission planners and state Public Service Commissions to increase access • Current transmission planning accounts for predicted to affordable, renewable energy by approving customer demand, known power plants and their upgrades and expansion to transmission lines; locations, grid reliability issues requirements, and public policy requirements, such as state and federal • Participate in regional and inter-regional environmental and clean energy standards. transmission planning conversations to ensure future transmission infrastructure meets • Transmission planners may, in rare instances, account customer demand for renewable energy; and for voluntary goals, such as statements by Governors, but do not account for the growing voluntary demand • Urge FERC to continue work to improve the from large corporate purchasers. interregional planning processes consistent with Order 1000. • Transmission planning is performed in fragmented sub-regions of the country, mainly through the Regional Transmission Organizations. Large amounts Operators of Regional Transmission of potential wind and solar energy are lost every day Organizations and others involved in in America’s heartland due to the lack of interregional transmission planning should: transmission planning to deliver them to markets in • Incorporate voluntary, large customer demand the East and West. There are particular challenges in transmission planning. associated with transferring electricity from the Eastern Interconnection to the Western Interconnection, which • Strengthen planning across RTOs and other can be done today through limited direct-current regional planning authorities to ensure efficient interconnections, but future improvements could interregional transmission. enable a unified national power grid. TRANSMISSION REPORT | 7 8 | TRANSMISSION REPORT III. CORPORATE DEMAND FOR RENEWABLE ENERGY IS GROWING Over the past several years, corporate demand for renewable energy has risen sharply as many companies